8) Suppose that Coca-Cola is considering a new capital budgeting project. The project will use debt with maturities of 15 years. To determine the cost of debt for the project, an analyst at Coca-Cola looks at currently trading Coca-Cola debt. The analyst is looking at a Coke bond that trades today for $1,022.00. This bond has an annual coupon rate of 8.00%, face value of $1,000, and will mature in 15 years. The marginal tax rate for Coca-Cola is 31.00%.

a) What is the yield to maturity for the currently trading Coke bond?

b) What coupon rate will Coca-Cola put on a new bond?

c)What is the after-tax cost of debt for Coca-Cola?

11) Cream and Crimson Foods has a target capital structure of calling for 43.00 percent debt, 2.00 percent preferred stock, and 55.00 percent common equity (retained earnings plus common stock). Its before-tax cost of debt is 10.00 percent. The tax rate is 40.00%. Its cost of preferred stock is 11.10%. Its cost of common equity is 14.35%.

Find the WACC for Cream and Crimson Foods?

13) Raylan Givens Incorporated has a target capital structure of 23.00% notes payable (debt), 2.00% preferred stock, and 75.00% common stock. Currently, banks want 9.00% on their notes, preferred stock owners would like 10.00%, while common stock holders require 14.00%. If the marginal tax rate is 40.00%, find the weighted average cost of capital for Givens.